Public Statements

Governor Authorizes Pay for Performance Increase for State Employees

Press Release

Governor Mitch Daniels has authorized a pay increase for state employees in 2012 that will be based on their most recent job performance. In a letter sent to employees today, the governor said Indiana has the most productive state employees in the country.

"Our pay for performance system has become the subject of interest all over the country, with many other states working to replicate it," Daniels said. "Outside government, workers are rewarded based on the quality of their performance, and that produces better results. It shouldn't be a surprise it works in government, too."

State employees who receive a positive performance review will receive, on average, a 2.2 percent increase. Specifically:

* Employees who are evaluated as outstanding will receive a 6 percent increase. Approximately 5 percent of employees are expected to be in this category. * Employees who "exceed expectations" will earn a 4 percent raise. This is approximately 10 percent of state employees. * Employees who "meet expectations," approximately 75 percent of employees, will earn a 2 percent raise. * Employees who do not meet expectations or need improvement will receive no increase. This is about 10 percent of employees. * The governor also re-instated a $15 bi-weekly matching contribution to state employees for deferred compensation retirement accounts. This match was suspended in 2010 as a cost-savings measure.

The governor's pay for performance model has been in place since 2006. State employees did not receive pay increases in 2009 or 2010 when the governor reduced spending throughout the executive branch of state government as state revenues fell off during the national recession. In 2011, state employees received an increase averaging 1.3 percent, based on performance. In July, the governor also rewarded employees with a surprise "efficiency dividend" based on their role in keeping Indiana's fiscal condition among the strongest in the country.

State employee reviews are currently being conducted, and the pay increases will be effective in February.

The letter to employees can be found at this link: http://www.in.gov/gov/files/122111letter.pdf